The Bank of England's Monetary Policy Committee voted 7-2 to keep interest rates level in March. Source: BBC News | Business | World Edition | 19 Mar 2008 | 10:12 am
PARIS (Reuters) - France's biggest listed bank, BNP Paribas, has decided not to pursue a possible tie-up with rival Societe Generale, which has been seen as a bid target after suffering a trading scandal.
Reuters - The Bank of Japan will be entrusted to a
temporary leader for the first time in 80 years, even as
central banks work together to combat a credit crisis, after
parliament rejected a last ditch attempt to replace the
governor before he retires in a few hours.
Since mid January we have had five Fed initiative rallies (two liquidity injections and three rate cuts) which have all caused major moves to the upside on their respective announcements. In between times the direction has been, as you would expect, singularly grim Source: Telegraph Business | 19 Mar 2008 | 10:00 am
Think of it as Silicon Valley's seven-year itch. That's about the length of time needed for the typical investment, employment, and emotional bubble to inflate and then burst in the global center of the technology industry. The last bubble, known forever as the dot-com craze, started and ended in the Valley.
Reuters - Mobile phone maker Sony Ericsson
warned on Wednesday first-quarter earnings could fall by more
than half, adding to growing gloom in the handset sector and
dealing co-parent Ericsson (ERICb.ST) a fresh blow. Source: Yahoo! News: Business | 19 Mar 2008 | 9:38 am
STOCKHOLM (Reuters) - Mobile phone maker Sony Ericsson warned on Wednesday first-quarter earnings could fall by more than half, adding to growing gloom in the handset sector and dealing co-parent Ericsson a fresh blow.
NEW YORK (Reuters) - Apple Inc is in talks with major music companies to offer customers free access to its entire iTunes music library in exchange for paying a premium for its iPods and iPhones, the Financial Times said.
Europe's major stock markets are mixed after strong gains in Asia and Wall Street overnight. Source: BBC News | Business | World Edition | 19 Mar 2008 | 9:32 am
Toshiba says pulling out of the high definition DVD format battle will cost it $666m and hurt its profits. Source: BBC News | Business | World Edition | 19 Mar 2008 | 9:29 am
The spiking share price of cash-strapped investment bank Bear Stearns suggests savvy traders are wagering that JPMorgan Chase is going to have to increase its lowly $2-a-share bid.
The biggest German bank, Deutsche Bank, said Wednesday it would increase its stake in Hua Xia Bank of China to 13.7 percent from 9.9 percent at a cost of 352 million euros (550 million... Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 9:23 am
The Federal Reserve slashed a key interest rate by three-quarters of a percentage point Tuesday, the latest in a series of moves by the central bank to try and restore confidence in the economy and battered financial markets.
France’s largest bank, BNP Paribas, said Wednesday it’s no longer considering a bid for its rival Societe Generale, which has been battered by a $7.5 billion rogue trading scandal.
Clive Briault, who oversaw the Financial Services Authority's supervision of Northern Rock, has left the City regulator by "mutual agreement". Source: Telegraph Business | 19 Mar 2008 | 9:00 am
This week is turning out to be one for the record books for J.P. Morgan. It came out looking like a winner by bailing out Bear Stearns at a deep discount, and now its cash register continues to ring with the initial public offering of Visa.
J.P. Morgan is one of the two lead underwriters for the deal and also it's the biggest banking shareholder behind the credit card processor. And what a deal it is: shares priced at $44 last night, above the expected range of $37 to $42.
By selling 406 million shares, Visa is set to raise $17.9 billion, more than any other I.P.O. in history. It also happens to be raising more money in this single offering than all other I.P.O.s worldwide combined have raised so far this year, according to Bloomberg data.
It's a gamble for Visa to enter the public markets during one of the most volatile periods in recent stock market history. The S&P 500 index fell nearly 10 percent during the first two months of the year. Since March started, it fell another four percent and then regained the same amount, mostly from yesterday's rally.
But there's good reason for investors to welcome Visa to the public fray. Mastercard, the number-two credit card company behind Visa, issued shares for $39 in May of 2006, and they now trade at $210.
Both Visa and Mastercard are benefiting from a consumer spending culture driven increasingly by plastic—an estimated 55 percent of all transactions are expected to use plastic by 2011, up from 40 percent in 2005. Visa has about 60 percent of the market for debit transactions. The credit card companies are in the enviable position of collecting fees with each transaction, while letting their banking partners shoulder the actual debt.
The offering will also provide a capital windfall for some in the beleaguered banking sector. Visa plans to use $10 billion of the proceeds from the offering to buy class B shares from its member banks.
J.P. Morgan, the largest shareholder, plans to sell 29 million shares for $1.3 billion and Bank of America will make over $600 million by unloading 14 million shares. Other banks expecting smaller windfalls include National City Corporation, Citigroup, U.S. Bancorp, and Wells Fargo.
BNP Paribas, France’s biggest bank, has said that it will not pursue a
potential merger with its beleagured rival Société Générale. Source: Latest Business News from Times Online | 19 Mar 2008 | 8:59 am
The London-listed banking sector falls as jitters persist about the state of the financial markets. Shares in mortgage banks HBOS and Bradford & Bingley are under notable selling pressure.
U.S. stock futures pulled back on Wednesday, after the Dow Jones Industrial Average registered its fourth-largest point gain ever and Visa recorded the top initial public offering in the country’s history.
No-frills airline EasyJet has warned investors that its profits may be lower
than expected this year, despite earlier more optimistic forecasts. Source: Latest Business News from Times Online | 19 Mar 2008 | 8:40 am
French bank BNP Paribas rules out plans to merge with troubled rival Societe Generale. Source: BBC News | Business | World Edition | 19 Mar 2008 | 8:40 am
NEW YORK (Reuters) - New York City's comptroller, who helps oversee the city's pension funds, on Tuesday said he will investigate whether the failure of Bear Stearns & Co was due to miscalculation or deception, which could trigger a lawsuit to recover losses.
Stark evidence of how waning consumer confidence is feeding through to high
street sales was given by Next, the clothing retailer today, as the store
predicted a gloomy year ahead as its customers struggle with a mountain of
rising household costs. Source: Latest Business News from Times Online | 19 Mar 2008 | 8:31 am
One of Washington's rites of spring is almost upon us. It's the wonks' version of the Cherry Blossom Festival - the release of the annual Social Security trustees' report showing the health of our nation's biggest social program. Each year the report touches off a debate, mostly misguided, about Social Security's financial status. Given the political environment this year, you can expect more heat than usual when the report comes out. But you're unlikely to see much light.
The Bank of Japan may be preparing to cut interest rates next month despite a
succession crisis that has left the world’s second largest economy without a
Governor of the central bank for the first time. Source: Latest Business News from Times Online | 19 Mar 2008 | 8:14 am
Sony Ericsson, the world's No. 4 mobile phone maker, warned that slower growth in its European markets would hit its first quarter sales, though its gross margin would remain the same on the year ago level... Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Mar 2008 | 8:13 am
Germany's Dresdner Bank has extended 1.5 billion dollars (950 million euros) to one of its affiliated specialist investment funds, K2, to allow it to repay debt, the latest in a series of... Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 8:10 am
France's biggest listed bank BNP Paribas said it has decided not to pursue a possible tie-up with rival Société Générale, which has been hit by a trading scandal Source: FT.com - US homepage | 19 Mar 2008 | 8:05 am
France's biggest listed bank BNP Paribas said on Wednesday it has decided not to pursue a possible tie-up with rival Socit Gnrale, which has been hit by a trading scandal. "Given the persistent rumours,... Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Mar 2008 | 8:05 am
Low-cost carrier has become the latest victim of the turbulence in financial markets after warning that soaring oil prices will hit profits. Source: Telegraph Business | 19 Mar 2008 | 8:00 am
Low-cost carrier easyjet has become the latest victim of the turbulence in financial markets after warning that soaring oil prices will hit profits. Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Mar 2008 | 8:00 am
The biggest German bank, Deutsche Bank said Wednesday it will increase its stake in Huaxia Bank of China to 13.7 percent from 9.9 percent at a cost of 352 million euros (550 million... Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 7:58 am
Asian indexes turned sharply higher Wednesday, relieved by the Federal Reserve's rate cut and better-than-expected profit reports from U.S. investment banks, but they ended below the day's peaks as investors were cautious about the rally's prospects.
European shares extended the previous session’s gains on Wednesday, led by an advance in the auto sector, after the U.S. Federal Reserve stepped in with a 75 basis-point interest rate cut to shore up economic growth.
WASHINGTON (Reuters) - A U.S. government auction of wireless airwaves ended on Tuesday raising a record $19.59 billion, but winners of the valuable spectrum were not immediately identified.
HELSINKI/STOCKHOLM (Reuters) - Sony Ericsson, the world's No. 4 cellphone maker, warned that slower growth in its European markets would hit its first quarter sales, though its gross margin Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 7:37 am
Air France's talks with unions representing workers at takeover target Alitalia break down on the issue of job cuts. Source: BBC News | Business | World Edition | 19 Mar 2008 | 7:30 am
WASHINGTON/NEW YORK (Reuters) - The Federal Reserve slashed U.S. interest rates on Tuesday, boosting Wall Street, which was already higher on stronger-than-expected investment bank earnings.
Retailer Next unveils a 4% rise in annual profits, saying it is a good result "in a period of economic slowdown". Source: BBC News | Business | World Edition | 19 Mar 2008 | 7:25 am
Reuters - Apple Inc is in talks with
major music companies to offer customers free access to its
entire iTunes music library in exchange for paying a premium
for its iPods and iPhones, the Financial Times said.
NEW YORK (Reuters) - Apple Inc is in talks with major music companies to offer customers free access to its entire iTunes music library in exchange for paying a premium for its iPods and... Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 7:19 am
TOKYO (Reuters) - The Japanese central bank will be run by a temporary leader in the midst of a credit crisis, after parliament rejected on Wednesday the government's latest nominee to replace the current governor when he retires in a few hours.
Investors also are heartened by better-than-expected profit reports from Lehman Bros. and Goldman Sachs.
The up-and-down stock market had a huge up day Tuesday, with the Dow Jones industrial average leaping more than 400 points even though the Federal Reserve cut its key interest rate less than many had expected.
The banker puts his legal woes behind him and opens a tech-focused investment firm.
Five years after walking away from his wildly successful investment banking career to defend himself against criminal charges stemming from the collapse of Internet stocks, Frank Quattrone is returning to the role he most relishes: as a counselor to high-tech companies.
Major shareholders are told that Microsoft's $42-billion takeover offer is much too low.
Yahoo Inc.'s top executives Tuesday began a weeklong campaign to convince major shareholders that the Web powerhouse is worth more than the $42 billion Microsoft Corp. is offering in a takeover bid.
In a forceful move to contain the growing credit crisis, the central bank slashes its benchmark interest rate by three-quarters of a percentage point to 2.25%. ... Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Mar 2008 | 7:00 am
The studio names Toby Emmerich to run the unit, which it says will remain distinct.
Moving to reorganize New Line Cinema into a smaller, stand-alone production company, Warner Bros. has named Toby Emmerich president and chief operating officer of the entity.
In a forceful move to contain the growing credit crisis, the central bank slashes its benchmark interest rate by three-quarters of a percentage point to 2.25%.
The Federal Reserve, fully embracing its role as rescuer of financial markets and the economy, slashed interest rates again Tuesday even as it conceded that a traditional target of its efforts, inflation, was picking up.
Poizner, the state's insurance commissioner, orders Allstate to roll back its prices more steeply than the company had wanted. The insurer is considering a legal challenge. ... Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Mar 2008 | 7:00 am
Jerome Kerviel, the Frenchman blamed by his company for the world's biggest rogue trading scandal, left jail Tuesday after winning a legal battle against detention. Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Mar 2008 | 7:00 am
For years, credit card issuers have gotten away with withholding contracts from customers until they actually have the plastic in their hands -- a practice that denies many people a fair chance to look... Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Mar 2008 | 7:00 am
They remain roughly where they were a year ago amid banks' wariness about making loans.
The Federal Reserve has been slashing short-term interest rates since August with precious little effect on the one that matters most to homeowners and home buyers: the 30-year fixed mortgage rate.
5 are arrested and 2 sought, accused of victimizing thousands of Californians, some of them elderly and some who lost their homes.
State and local prosecutors said Tuesday that they had shut down a mortgage fraud ring that allegedly victimized thousands of seniors and others, some of whom lost their homes.
The Fed's intent is to coax money from low-yielding accounts back into stocks.
With its latest steep interest rate cut, the nation's central bank is trying again to prod skittish investors and lenders out of their protective crouch.
For years, credit card issuers have gotten away with withholding contracts from customers until they actually have the plastic in their hands -- a practice that denies many people a fair chance to look under the hood for onerous terms and conditions.
Asian stock markets rose Wednesday as investors welcomed a hefty U.S. interest rate cut and a rally on Wall Street overnight. Sentiment was also lifted by better-than-expected earnings... Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 6:53 am
The Japanese government's latest nominee to be governor of the Bank of Japan is vetoed by the opposition. Source: BBC News | Business | World Edition | 19 Mar 2008 | 6:46 am
US President George W Bush again urges the US Congress to approve a free trade deal with Colombia. Source: BBC News | Business | World Edition | 19 Mar 2008 | 6:05 am
As a US Airways pilot for two decades, Richard Obermeyer endured years of pay cuts, a terminated pension program and the possibility of losing seniority after the carrier combined with... Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 6:00 am
The credit crisis that has been haunting the stock market for months wasn't enough to scare investors away from the IPO of the world's largest credit card processor. Overcoming the... Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 5:55 am
The government is loosening capital restraints on Fannie Mae and Freddie Mac so that the mortgage-finance companies can expand their roles in the stricken housing market. The Office of Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 5:49 am
NEW YORK (Reuters) - Visa Inc burned its name into the record books for U.S. initial public offerings on Tuesday, raising $17.9 billion as investors seized on its growth potential and lack of direct exposure to the global credit crisis.
Japan's opposition-controlled Upper House rejected the government's nomination of former Vice Finance Minister Koji Tanami for the post of governor at the Bank of Japan Wednesday. The move came hours before Gov. Toshihiko Fukui is due to step down, setting the stage for a leadership vacuum at the central bank.
TOKYO (Reuters) - Japanese automakers face a hit to their earnings in the next business year if the yen remains strong, but there are no plans to ask the government to intervene in the... Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Mar 2008 | 5:33 am
On the morning of that year's annual shareholders' meeting, the global coffee behemoth's stock price had risen more than 40 percent for the year and was still climbing.
Founder, chairman, and chief executive Howard Schultz was holding court on stage in Seattle's massive McCaw Hall, and did a stunt involving the Space Needle, 3,100 feet of PVC tubing, and a nitrogen tank (don't ask).
Schultz was doing party tricks for an audience of over 5,000 highly caffeinated investors, who had gathered for the purpose of celebrating how much money they were all making. Also to hear about strategy going forward. But mostly to celebrate how much money they were making.
By 2007's meeting the buzz had worn off slightly, with Starbucks' same-store sales having slowed over the course of the year and its stock price beginning to droop as a result. Investors needed reassurance, while farmers and baristas, who were protesting outside the convention center, said they needed a living wage.
But Schultz brought in a Beatle (Paul), and everything was a-okay.
This year, Starbucks shareholders are officially down from their high, and it's going to take more than Paul McCartney to distract them today from the big questions facing the coffee chain.
Starbucks Share Price
That's because Starbucks' stock is trading at half the value it was at this time last year, and this will be the first of the company's 16 annual meetings to take place amid a prolonged share-price slump.
Starbucks has been plagued with a host of economic woes (slowing consumer spending, rising commodity prices, and rising labor costs), as well as having made its own share of misjudgments over the past 18 months.
The feverish pace of store openings led to weakening comparable-store sales, as well as difficulty maintaining Starbucks' premium image and consistently high level of service. Rival retailers, smelling blood, have stepped up the competition.
So after seven years away from the job, Schultz replaced Jim Donald as C.E.O. He then began a steady stream of changes: Slowing growth, testing $1 coffee, shutting stores, providing free WiFi, 86'ing breakfast sandwiches, and sending baristas back to espresso school, to name a few.
But Schultz has made it clear that the meaty stuff has yet to be announced. Ever since his return he's promised that this year's annual meeting, which starts today, will bring a big unveiling of "transformational initiatives" - five of them, in fact, as the company made clear earlier this month.
It's anybody's guess as to exactly what Schultz has up his sleeve, but analysts are betting on new product announcements, innovations with Starbucks' loyalty card, and news related to the company's grocery channel.
Sharon Zackfia, a research analyst with William Blair & Company, says that she believes the most important objective of the meeting will be for investors to gain insight into how Schultz sees the company evolving, and to serve as a rallying crying to keep stakeholders positive in the midst of a challenging environment.
"There will definitely be a few things out of left field that none of us would have thought of," says Zackflia. "Howard is good at surprises."
Reuters - The regulator for Fannie Mae
and Freddie Mac will on Wednesday announce that the two
U.S. mortgage finance companies have won relief from stringent
capital rules and so can pump about $200 billion into a shaky
mortgage market, sources familiar with the plan said on
Tuesday.
NEW YORK (Reuters) - The regulator for Fannie Mae and Freddie Mac will on Wednesday announce that the two U.S. mortgage finance companies have won relief from stringent capital rules and so can pump about $200 billion into a shaky mortgage market, sources familiar with the plan said on Tuesday.
You could almost hear investors' collective sigh of relief Tuesday as they decided that the financial system wasn't about to completely disintegrate after all.
Over the course of my one-hour chat last week with Hugh Hefner at the Playboy Mansion's library, the king of hedonism told me about his strict upbringing in Chicago, the early days of Playboy magazine and how the conservative nature of the 1950s helped spawn a media empire.
Troubled vending machine franchise company VTL Group says it is at the due diligence stage in the sale of its 24seven vending business system operation in southern California.
VTL is the parent company of Nathans Finance which... Source: New Zealand Herald - Business | 19 Mar 2008 | 2:30 am
Cathay Pacific has been given the green light to build a new air cargo terminal at Hong Kong International Airport.
Freight through Hong Kong's airport is growing by 4.5 per cent annually.
The airline said they plan to invest... Source: New Zealand Herald - Business | 19 Mar 2008 | 1:30 am
Reuters - Visa Inc burned its name into
the record books for U.S. initial public offerings on Tuesday,
raising $17.9 billion as investors seized on its growth
potential and lack of direct exposure to the global credit
crisis.
Kiwi shoppers have been tightening their belts since the Christmas spend-up.
Credit card spending actually fell - by 0.1 per cent - on a seasonally adjusted basis in February, Statistics New Zealand said today.
Spending in the... Source: New Zealand Herald - Business | 19 Mar 2008 | 12:30 am
There's been a nasty surprise for those who took it for granted that they could sit tight and let the housing boom increase their net worth.
Spicers' latest Household Savings Indicators report today shows the net worth of the average... Source: New Zealand Herald - Business | 19 Mar 2008 | 12:30 am
The sharemarket is humming along today, shrugging off the woes that beset global marketplaces earlier in the week.
At 12.30pm the NZX-50 index was up almost 1.7 per cent at 3476.
Across the Tasman, the benchmark S&P/ASX200 index... Source: New Zealand Herald - Business | 19 Mar 2008 | 12:25 am
Reuters - The Federal Reserve slashed
U.S. interest rates on Tuesday, boosting Wall Street, which was
already higher on stronger-than-expected investment bank
earnings.
SYDNEY - Google, the world's leading internet search engine, said it was well positioned to weather any economic downturn as its advertisers were broad based.
Google Chief Executive Eric Schmidt acknowledged sliding share values... Source: New Zealand Herald - Business | 19 Mar 2008 | 12:15 am
Gordon Brown has appealed to voters not to lose confidence in Labour as the economic situation deteriorates. Source: Telegraph Business | 19 Mar 2008 | 12:01 am
Rising mortgage costs have forced millions of people to seek help in paying their household bills, two leading debt charities have warned. Source: Telegraph Business | 19 Mar 2008 | 12:01 am
Debenhams shares have risen after the department store chain reported that it had gained market share from Marks & Spencer and other rivals. Source: Telegraph Business | 19 Mar 2008 | 12:01 am
The Federal Reserve's cautious 75 basis point cut in interest rates cut is both a sign of confidence and of concern about the threat of inflation, experts said last night as they digested the US central bank's interest rate decision. Source: Telegraph Business | 19 Mar 2008 | 12:01 am
Legal & General, the UK's third-biggest life insurer, has been hit with a £269m charge after recalculating its numbers for future British life expectancy. Source: Telegraph Business | 19 Mar 2008 | 12:01 am
The beleaguered UK pharmaceutical industry has cut more than 10pc of its workforce, or 8,000 employees, over the past three years, figures from the Association of the British Pharmaceutical Industry (ABPI) show. Source: Telegraph Business | 19 Mar 2008 | 12:01 am
Robert Tchenguiz, the Iranian property tycoon, is to put his Laurel pub company into administration in a move likely to spark anger among landlords, employees and the taxman. Source: Telegraph Business | 19 Mar 2008 | 12:01 am
Vodafone is to dismiss a fifth of its senior head office managers while
recruiting nearly 500 sales and retail staff, as it attempts to increase its
share of the increasingly competitive mobile internet and broadband market. Source: Latest Business News from Times Online | 19 Mar 2008 | 12:00 am
Chinese banks have been ordered to set aside record levels of reserves after
Wen Jiabao, the Prime Minister, admitted that he was “deeply worried” by the
prospect of the US sub-prime meltdown spreading around the world. Source: Latest Business News from Times Online | 19 Mar 2008 | 12:00 am
Three former executives who helped UBS to a SwFr4.4 billion (£2.19 billion)
loss last year will share in a SwFr90 million payout from Switzerland's
biggest bank. Source: Latest Business News from Times Online | 19 Mar 2008 | 12:00 am
<b><a href="http://business.timesonline.co.uk/tol/business/economics/">Economics</a></b> Source: Latest Business News from Times Online | 19 Mar 2008 | 12:00 am
Soaring household energy bills sparked another sharp jump in inflation last
month, worsening the Bank of England’s quandary over how to respond to
conflicting pressures from rising price pressures and faltering growth. Source: Latest Business News from Times Online | 19 Mar 2008 | 12:00 am
Since at least the turn of the century, the twin booms in the housing market
and the high street have seen Britain's seemingly unstoppable army of
consumers spending with abandon. In a “What the hell?” culture of “Buy today
and worry tomorrow” that has gripped the nation, households have run up
mountainous debts that now total £1.4 trillion. Source: Latest Business News from Times Online | 19 Mar 2008 | 12:00 am
A survey out today shows we're a pretty good country to do business with.
If we were a business, New Zealand would be the customer who always pays on time.
New Zealand holds steady in the number five position on the Dun & Bradstreet... Source: New Zealand Herald - Business | 19 Mar 2008 | 12:00 am
Have you ever called someone a "glass half empty" type person?
When I have tried to express a feeling I have had when seeing something that seemed lacking in some way, I have been scolded for being critical. People have said, "I... Source: New Zealand Herald - Business | 19 Mar 2008 | 12:00 am
Visa Inc, the world's largest credit card network, set a record for US initial public offerings by raising $17.9bn, providing a welcome windfall to several prominent US banks Source: FT.com - US homepage | 18 Mar 2008 | 11:46 pm
Crescent Capital Partners said yesterday its offer for Abano Healthcare had lapsed after falling short of 50.1 per cent on Friday.
The Australian private equity investor had not yet decided whether to make a new offer or walk... Source: New Zealand Herald - Business | 18 Mar 2008 | 11:30 pm
Investors increased their bets that other bidders would emerge for Bear Stearns or JPMorgan Chase would be forced to increase its offer, driving shares in the beleaguered investment bank to nearly three times JPMorgan's takeover price Source: FT.com - US homepage | 18 Mar 2008 | 11:28 pm
Worldwide payment card group Visa has raised more than $17.9bn (£8.9bn) in the biggest US share issue. Source: BBC News | Business | World Edition | 18 Mar 2008 | 11:01 pm
Apple is in discussions with the big music companies about a radical new business model that would give customers unlimited access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices Source: FT.com - US homepage | 18 Mar 2008 | 10:01 pm
AP - The Federal Reserve slashed a key interest rate by three-quarters of a point Tuesday, capping its most aggressive two months of action in a quarter-century in a battle to halt a spreading credit crisis. Wall Street loved it, bursting to its biggest gain in five years.
US stock markets staged a powerful rebound this morning (NZ time) as the Federal Reserve slashed its main interest rate by 75 basis points to ease a broadening credit crunch.
Wall Street shares ended sharply higher in the wake... Source: New Zealand Herald - Business | 18 Mar 2008 | 9:20 pm
NEW YORK (Reuters) - Stocks rang up their biggest one-day gains in more than five years as the S&P 500 jumped on Tuesday after the Fed's deep interest-rate cut and solid results from two top investment banks reassured investors shocked by Bear Stearns' sudden downfall.
Goldman Sachs and Lehman Brothers helped lift the gloom on Wall Street when both reported smaller-than-expected profit declines Source: FT.com - US homepage | 18 Mar 2008 | 8:32 pm
China froze some iron ore shipments from Australia's two largest mining groups, Rio Tinto and BHP Billiton, potentially transforming annual price negotiations into a diplomatic, as well as commercial, dispute Source: FT.com - US homepage | 18 Mar 2008 | 7:03 pm
AFP - Tension is growing at Hugo Boss against its new owner, the British investment fund Permira, with some accusing it of pillaging the German fashion retailer that has lost a top director and is set to lose another.
US stocks staged their biggest rally in more than five years as confidence in the stability of the financial system grew and the Federal Reserve cut interest rates by 75 basis points to 2.25 per cent Source: FT.com - US homepage | 18 Mar 2008 | 6:26 pm
Between phasing out nuclear power and a pledge to cut carbon dioxide by 40 percent, Europe's industrial leader could be headed towards an energy crisis. Brett Neely reports how Germany is hoping new technology could clean up its dirty coal plants. Source: Marketplace | 18 Mar 2008 | 6:07 pm
Nearly three-quarters of Americans believe the economy is in recession, according to a new USA Today-Gallup poll. Commentator and economist Tyler Cowen says it might make us feel better, but it's best to leave the real definitions to the economists. Source: Marketplace | 18 Mar 2008 | 6:07 pm
The mailbox is bursting with your comments. This week: your thoughts on our special series "The Middle East at Work," including your personal observations from living and working in Dubai. Source: Marketplace | 18 Mar 2008 | 6:07 pm
As the price of copper is goes up, so does the value of old pennies -- those coins minted before 1982 that still have actual copper in them. Now some people are banking on pennies to pay off big. Mary Rose Abraham reports on the new craze of penny hoarding. Source: Marketplace | 18 Mar 2008 | 6:07 pm
The U.S. Supreme Court will hear arguments on whether California employers can spend state money on anti-union activities. It's a battle between free speech and taxpayer rights, but with a twist. John Dimsdale reports. Source: Marketplace | 18 Mar 2008 | 6:07 pm
From mom and pop investors to day traders, everyone is affected by the chaotic market. Kai Ryssdal speaks to Daniel Scotto's of Whitehall Investment Advisors about what an individual investor can do while the market normalizes. Source: Marketplace | 18 Mar 2008 | 6:07 pm
Though the stock market has been deeply troubled by the subprime mortgage crisis, it has yet to crash. Many attribute the relative health of the markets to actions made by the Fed to keep the cash flowing. Ashley Milne-Tyte reports on what the Fed may do next. Source: Marketplace | 18 Mar 2008 | 6:07 pm
Between bailing out investment banks and making loans to securities dealers, Fed Chief Ben Bernanke and company have been busy lately. The big cut in short-term interest rates boosted the markets, but inflation still looms. Kai Ryssdal has the story. Source: Marketplace | 18 Mar 2008 | 6:07 pm
Reluctant to betray the hard-won identities of its three automotive brands, Germany's BMW Group is reportedly contemplating the addition of a fourth nameplate — joining BMW, Rolls-Royce, and Mini — focused exclusively on the development and marketing of eco-friendly vehicles.
Despite a very prolific Efficient Dynamics program that has produced such concept vehicles as the Hydrogen 7 sedan and the recent X5-based twin-turbo diesel hybrid concept, BMW brand's Ultimate Driving Machine tagline doesn't leave a lot of room for serious fuel-sippers. Ditto Rolls-Royce, despite persistent rumors of a smaller, diesel-powered model in the venerable marque's future. Even Mini, with its stable of diminutive models, stands to see its fun-to-drive allure diminished by, say, an pure electric city car or a maximum-mpg mini-hybrid such as the Smart ForTwo Micro Hybrid Drive.
So the company has initiated "Project I." The undertaking, which may evolve into a stand-alone, green-focused brand within seven years, is charged with examining a range of technological options for environmentally friendly powertrain systems. The I in "Project I" reportedly stands for Innovation, but Isetta seems a whole lot more likely.
The Isetta was a bubble car of Italian origin (pictured above, in triplicate), eventually acquired and built by BMW between 1955 and 1962. Besides enjoying surprising popularity in its day, the tiny car, with its teardrop shape and unique front-end door, has risen to cult status in the decades since. It's an ideal nameplate for BMW's green efforts.
Investors, their confidence buoyed earlier in the day by resilient results from Lehman Brothers and Goldman Sachs, welcomed the Federal Reserve's cut in interest rates even though it was not quite as big as expected.
The rate cut and the quarterly results eased fears that another big financial institution would be crushed by the unforgiving credit markets. Stocks had their biggest rally since October 2002.
"The run on the investment banks would appear to be over,'' Doug Peta, a market strategist with J&W Seligman & Co., told Bloomberg News.
The Dow Jones industrials surged 420.41 points, or 3.5 percent. It was its fourth-biggest point gain ever. The S&P 500 gained 54.14 points, or 4.2 percent.
The market reaction indicates that the Fed had already done its most important work in unveiling this weekend another round of emergency measures to make hundreds of billions of dollars available to halt a panic in the credit markets.
Still, today's rate cut was welcome, coming as it does after an unusually aggressive campaign of monetary easing. Last summer, when the credit crunch exploded into a global crisis, the Fed's benchmark rate, its target for the federal funds rate, was 5.25 percent. When the year began, it was at 4.25 percent. Now it is at 2.25 percent, much less than the annual rate of inflation.
In announcing the rate cut, the central bank's statement gave a bleak summary of the current economic slowdown.
"Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters."
But the Fed also pointed to the danger of inflationary pressures building, saying that uncertainty about the inflation outlook has increased. "Inflation has been elevated, and some indicators of inflation expectations have risen," the Fed said.
Such concerns worked against a full-point rate cut. Indeed, the vote to cut rates was unusually divided, 8 to 2, with two central bank governors wanting "less aggressive action."
As the mortgage and financial crisis continues to notch more victims, the question on many economists' minds is not whether a recession will happen, but how deep it will get and how long it will last. But one prominent voice thinks the high-flying finance industry isn't going to bounce back — and that we'll need to look elsewhere to set the U.S. economy back on firm footing.
In a widely discussed Harper's article in February, "The Next Bubble: Priming the Markets for Tomorrow's Crash," Janszen argued that clean tech is the only sector that could create enough "fictitious value" to replace the losses from the housing bubble, if only temporarily.
Neither a clean-tech skeptic nor a booster, he wrote, "Given the current state of our economy, the only thing worse than a new bubble would be its absence."
Wired.com recently spoke with Janszen to discuss the state of the economy, his plan to pay for alternative energy with a tariff on oil, and how running fiber to your home is good energy policy.
Wired: Though you focus on clean tech, you are making a broader argument about the U.S. economy and its reliance on the finance industry. How is the economy now bubble-based?
Eric Janszen: The elevator pitch is that we've gone through a series of asset-price inflations that started back in 1995. What really kicked the whole series off were some changes that the Feds made to the U.S. banking system to get us out of the recession that we were in during the early 1990s. That facilitated the beginnings of a growth in credit that supported the two bubbles: internet and real estate.
Wired: And you argue that the next step is a clean-tech bubble that could create $20 trillion of fictitious wealth?
Janszen: It's not really a bubble. I think of it as a legitimate use of the way that our economy works and [how] our financial markets function now. The alternative title for the Harper's piece was "The Good Bubble." Clean tech could be an extremely efficient use of capital.
My editors over at Harper's wanted to make this thing as controversial as possible. My forthcoming book goes deeper into the issue of how we're going into the period of time where the FIRE — finance, insurance and real estate — economy is in a steep decline. Within a year or so, it's going to be very obvious that resuscitating it in its old form will be impossible.
What's going to be necessary are some structural changes to the economy that are longer-term and somewhat more painful.
Wired: What kind of structural changes are you talking about?
Janszen: Reduction of dependency on debt financing to stimulate the economy. Over the last seven years, every new job that has been created has resulted in $1.8 million of new public- and private-sector debt. That's obviously not sustainable. That's way too inefficient. It used to be about 50 cents of new debt was required to generate $1 in gross-domestic-product growth. Now it's $9 for $1 of GDP growth.
Wired: How bad do you think the U.S. economy is going to get?
Janszen: It's going to surprise people. The impact that housing is having on our credit system is just starting to be felt. It's not clear, in the absence of the concerted effort to make investments in the clean-tech sector, what geographies or sectors are going to pull the U.S. out of the recession.
What tends to happen is that policymakers survey this scene and say: "What are we going to do to get people working?" The focus on one sector of the economy can drag us out.
Wired: You propose several prospective sectors to do that, including health care and biotechnology, but toss them out. Why is clean tech different?
Janszen: Alternative energy and infrastructure is the only area of the economy that is scalable and politically expedient. I mean infrastructure in economic terms, so [that includes] roads, bridges, communications and the energy infrastructure.
Wired: You don't mention carbon dioxide emissions, anthropogenic global warming or the environment a single time in the Harper's article. Do you believe that there is the need for alternative energy because of environmental realities, or are economics or politics driving these investments?
Janszen: My own feeling, when I look at what would be entailed in digging tar sands up so we can keep driving big cars, is that I'd do everything I could to prevent that.
The first order of business is conservation. Real political leadership means putting together long-term interest ahead of short, and it's clearly in the long-term interest to look at the environment.
Wired: Is it possible to have an energy policy that promotes alternative energy without promoting a bubble?
Janszen: Absolutely. The whole mechanism of financing these speculative bubbles needs to change. What'll happen is that we'll revert back to how markets should operate. Capital will be much more risk-averse.
Wired: What do you see as the nascent financing and credit vehicles that could come up with the trillions of dollars needed to finance clean tech without creating a bubble?
Janszen: One way to do it is to put a floating tariff on the price of oil and gradually raise the price up to $200 or $300 a barrel. As long as you do it gradually, the economy can respond to it. That's the beauty of our system. It has responded very calmly to an increase from $20 to $100. The economy hasn't collapsed. It's definitely slowing, but it's not wrecking it. You could create a process that gradually forced a lot of relatively painless transition without wrecking the economy.
Wired: What types of infrastructure changes would be part of that transition?
Janszen: Transportation. The big capital-intensive effort is high-speed rail. You need government to get its act together to pull something off.
I'm also proposing public-private corporations that have the deep pockets of government but the obligations to shareholders of a private corporation. There are going to be market mechanisms, so you don't end up years late and billions of dollars over budget.
Another part of it is energy infrastructure. It's an archaic system with a lot of coal power. I'm suggesting a lot of nukes, but modern ones—pebble-bed reactors.
Communications is also a big part of it. If the high-level objective is to reduce the energy intensity of the U.S. economy, why don't we run fiber-optic cable to everyone's house? That will support applications to allow people to stop commuting.
AP - Northern Rock PLC will slash one-third of its staff and cut its home loans book by half as it phases out financial support from the government over the next three to four years, the British lender said Tuesday. Source: Yahoo! News: Business | 18 Mar 2008 | 2:20 pm
In almost every way, J.P. Morgan Chase & Co.'s agreement to buy Bear Stearns Cos. is no ordinary deal. Besides the remarkable speed and fire-sale price at which an agreement was reached, the acquisition spawned no small amount of legal and regulatory innovation on the fly.
When J.P. Morgan and Bear Stearns announced the deal on Sunday, they had already obtained "all necessary approvals" from federal regulators. It was no surprise to have the blessing of the Federal Reserve, which had agreed to help finance the transaction. But these approvals included "all other federal agencies"—meaning that antitrust regulators signed off on the bailout before the ink on the deal was dry.
At the same time, the merger agreement gives J.P. Morgan an option to buy Bear Stearns' new headquarters in Manhattan at the discounted price of $1.1 billion if the deal does not go through. The option for the real estate, on its face, is worth more than the $236 million price to buy all of Bear Stearns at $2 a share.
"Everything about this deal is unprecedented," said a person with knowledge of the negotiations. And, in fact, many aspects of it are "on the edge of the applicable law."
J.P. Morgan tacitly acknowledged as much when it estimated that its "transactional" costs, should the deal get shareholder approval, would total about $6 billion—a figure that includes considerable reserves for the anticipated cost of litigation over the collapse and sale of Bear Stearns.
Securities class-action lawsuits have been almost inevitable as Bear Stearns' enthusiasm for mortgage-backed securities relentlessly eroded the value of its stock. Compounding that loss were steadfast assurances by Bear Stearns executives that all was well with the firm, some as recently as last Thursday.
The first suits have already been filed. Coughlin Stoia Geller Rudman & Robbins filed a class action Monday in Manhattan federal court on behalf of Bear Stearns shareholders. Expect more.
"There's no question, given the representations made by Bear Stearns, that institutional investors will initiate securities-fraud lawsuits," said Blair Nicholas of Bernstein Litowitz Berger & Grossman. "You have a company that has wiped out 90 percent of its equity in less than a year and a half and less than a week ago said everything was okay.
"We are looking very, very seriously at this on behalf of our large institutional investor client base," Nicholas added. It will be small comfort to the firm's new owner that Bear Stearns will not be alone. In 2007, plaintiffs filed 278 federal lawsuits related to subprime mortgage-backed securities, according to Navigant Consulting. Navigant predicts that the subprime-litigation wave will eclipse the record litigation that followed the savings and loan crisis in the late 1980s and early 1990s.
Securities-fraud class actions will not be the only legal headache for Bear Stearns and J.P. Morgan. Lawyers involved in the deal said they are also expecting a lawsuit challenging the deal itself. Law firms are already trolling for shareholders to sign on to such a lawsuit.
Bear Stearns' board is particularly vulnerable. In reviewing this deal, it was put in a very difficult spot: The Fed was looking to stanch a market panic—it wanted systemic relief. But the board's fiduciary duties begin and end with the interests of its own shareholders.
To help it navigate this thicket, the board hired H. Rodgin Cohen, chairman of Sullivan & Cromwell and the dean of the banking mergers and acquisitions bar, to advise it. Cohen has worked previously on major regulatory issues for Bear Stearns, and has represented some members of the board of directors in the past.
Cohen has worked on virtually every major bank deal for the past two decades—and has also participated in the resolution of bank failures, among them Continental Illinois and Bank of New England.
Cohen worked alongside two longtime advisers to Bears Stearns—Peter Atkins, a takeover specialist at Skadden Arps Slate Meagher & Flom, and Dennis J. Block of Cadwalader Wickersham & Taft, a mergers lawyer who has also handled a lot of securities litigation for Bear Stearns.
Bear Stearns' financial adviser, Lazard, has hired even more legal firepower. It turned to Cravath Swaine & Moore partners Erik R. Tavzel, James C. Woolery, and Richard Levin, a restructuring specialist.
J.P. Morgan Chase, meanwhile, hired Edward Herlihy of Wachtell Lipton Rosen & Katz, another giant in the banking mergers and acquisitions bar.
In the end, these lawyers helped the Bear Stearns board weigh two options: bankruptcy, or the deal on the table with J.P. Morgan. Bankruptcy was considered a "total disaster," according to another lawyer with knowledge of the deal. It would have meant casting 14,000 people out of work, and put their retirement savings and pensions at risk.
Several bankruptcy lawyers, who declined to speak on the record because of client relationships with either financial institution, agreed that there was little upside to a Bear Stearns bankruptcy.
The parent company is eligible to file for Chapter 11 reorganization, but many of its businesses are registered-stockholder businesses, which would face Chapter 7 liquidation and sale. "It has no great allure or utility," said one bankruptcy lawyer.
Another said that a Bear Stearns bankruptcy filing would be one of the most complicated and expensive in history. "There are so many transactions, it boggles the mind," this lawyers said.
A third pointed out a bankruptcy filing would not stay or put on hold many of Bear Stearns' outstanding loans, including deals known as "repos" and swaps, because the bankruptcy laws do not allow that.
Even so, there are arguments that bankruptcy could benefit Bear Stearns. It would allow the company to sell its collateral in an orderly way, rather than in a panic. But that would take at least 18 months. And, as one bankruptcy lawyer put it, shareholders could argue that "fear mongering" drove down the price of what would otherwise have been considered more solid assets.
As it faces a takeover by Microsoft, Yahoo is still fighting to win the hearts and minds of investors - or at least to justify a higher offer price from Microsoft.
Yahoo made public today a presentation given to its board in December, before Microsoft announced its offer.
Yahoo says it expects operating cash flow to nearly double to $3.7 billion over the next three years. The company is forecasting that it can get $1.9 billion in added revenue from display and video advertising. And it expects $1.4 billion in added search revenue.
"Yahoo is positioned for accelerated financial growth - we have a powerful consumer brand, a huge global audience, and a highly profitable operating model," said Jerry Yang, Yahoo's co-founder and C.E.O.
Shares of Yahoo are up nearly 5 percent in morning trading.
Henry Blodget on Silicon Alley Insider is skeptical that Yahoo can achieve that kind of revenue growth in search, given that Google continues to grab more market share. The rest of the assumptions, he says, are reasonable, but says, "We think the operating plan is closer to a ‘best case' scenario than a ‘most likely' scenario."
Still, he adds: "The plan should give Yahoo leverage to extract at least a couple more dollars per share out of Microsoft."
Clayton Moran, an analyst at Stanford Group Co. in Boca Raton, Florida, agrees. He told Bloomberg News: "This is one more push by them to get a higher bid. This is reflective of Yahoo's alternatives dwindling.''
Both firms reported sharp declines in their first-quarter profits, but the results surpassed forecasts.
For Goldman, exceeding expectations is a trick that it performs with astonishing regularity.
For Lehman, doing so should help soothe fears that Lehman could become the next Bear. And that should go a long way toward stabilizing very nervous markets.
Shares of Lehman have been pummeled in recent days, in a replay of 1998 when the Asian financial crisis, the Russian default, and the collapse of the giant hedge fund Long-Term Capital Management prompted speculation that Lehman would be swamped as a result.
Richard Fuld, Lehman's chief executive now and in 1998, told Jenny Anderson of the New York Times that "1998 was pretty ugly for us. This is uglier for the system—it's more pervasive and more global."
Lehman weathered the 1998 storm to become a much stronger player. In recent days, the firm has been highlighting its strong liquidity position ($34 billion at the end of the first quarter; Bear had $15 billion at the end of last year).
In addition, Lehman says it has assets that can be readily sold: $64 billion as well as $99 billion at its regulated entities.
"In what remains a challenging operating environment, our results reflect the value of our continued commitment to building a diversified platform and our focus on managing risk and maintaining a strong capital and liquidity position," Fuld said in a statement.
Citing the "continued deterioration in the broader credit markets," Lehman's capital markets business had a 52 percent decline in revenue for the quarter, to $1.7 billion. Revenue at investment management, however, rose 39 percent, to $968 million.
For the quarter, Lehman earned $489 million, or 81 cents per share, down from $1.2 billion, or $1.96 per share, in the quarter a year ago. Net revenue fell 31 percent.
Goldman Sachs reported a 53 percent decline in first-quarter earnings, but the firm's results easily exceeded estimates.
For the quarter, Goldman Sachs earned $1.5 billion, or $3.23 per share, compared with $3.2 billion, or $6.67 per share, in the quarter a year earlier.
The credit crunch had a impact in the quarter, and the firm reported net losses of $1 billion on residential mortgages and securities. It had another $1 billion loss (or $1.4 billion before hedges) on credit derivatives. Net revenues in its trading and principal-investments businesses fell 46 percent from the quarter a year ago and were down 26 percent from the fourth quarter.
Investment banks also suffered from the slowdown in deals and debt underwriting. Net revenues in investment banking fell 32 percent from a year ago.
Still, asset management was strong, with revenues rising 28 percent from a year ago.
Investors' nerves appear to have calmed in the wake of the Federal Reserve-backed emergency sale of Bear Stearns that averted a bankruptcy of the 85-year-old Wall Street firm.
After a scary start on Monday, U.S. stocks largely recovered. World markets are stable today.
Investors are now awaiting an additional boost from the Fed. The central bank is widely expected to reduce its benchmark interest rate by a full point, to 2 percent from 3 percent.
The steep rate cuts, the hundreds of billions of dollars in Treasury securities that the Fed is making available to banks, and the $30 billion financing for J.P. Morgan Chase to acquire Bear are the most aggressive actions ever taken by the central bank.
The risk for the Fed is that it may be using up all the weapons in its arsenal.
In its many efforts to combat the credit crisis, the Fed has committed as much as 60 percent of the $709 billion in Treasury securities on its balance sheet, Bloomberg News says.
And there is the danger that the Fed has set a precedent if there are other Bear Stearns about to erupt.
As Edmund Andrews says in the New York Times, "The biggest danger is damage to the Federal Reserve's credibility if it is seen as unwilling to let financial institutions face the consequences of their decisions."
Propping up banks and cutting rates to near zero? To cynical ears, that sounds a lot like the policies that marked Japan's decade-long economic malaise after its market bubble burst.
Reuters - The Bank of Japan will be entrusted to a
temporary leader for the first time in 80 years, even as
central banks work together to combat a credit crisis, after
parliament rejected a last ditch attempt to replace the
governor before he retires in a few hours.
Reuters - Apple Inc is in talks with
major music companies to offer customers free access to its
entire iTunes music library in exchange for paying a premium
for its iPods and iPhones, the Financial Times said.
Reuters - The regulator for Fannie Mae
and Freddie Mac will on Wednesday announce that the two
U.S. mortgage finance companies have won relief from stringent
capital rules and so can pump about $200 billion into a shaky
mortgage market, sources familiar with the plan said on
Tuesday.
Reuters - Visa Inc burned its name into
the record books for U.S. initial public offerings on Tuesday,
raising $17.9 billion as investors seized on its growth
potential and lack of direct exposure to the global credit
crisis.
Reuters - The Federal Reserve slashed
U.S. interest rates on Tuesday, boosting Wall Street, which was
already higher on stronger-than-expected investment bank
earnings.
AP - The Federal Reserve slashed a key interest rate by three-quarters of a point Tuesday, capping its most aggressive two months of action in a quarter-century in a battle to halt a spreading credit crisis. Wall Street loved it, bursting to its biggest gain in five years.
AFP - Tension is growing at Hugo Boss against its new owner, the British investment fund Permira, with some accusing it of pillaging the German fashion retailer that has lost a top director and is set to lose another.